Bollinger Mean Reversion
Buys when price closes below the lower Bollinger band (20, 2) and sells when it recovers to the middle band — betting statistically extreme moves snap back.
Entry Logic
Buy when the close falls below the lower band (20-day average minus 2 standard deviations).
Exit Logic
Sell when the close recovers above the middle band (the 20-day average).
How Rules Combine
Bands are a 20-day average plus/minus 2 standard deviations of price. A close below the lower band means price is stretched unusually far below its mean; the rule bets it reverts toward the middle.
When It Works (Market Edge)
Mean-reverting ranges where extreme lows bounce back toward the average.
When It Fails
Breakouts and strong downtrends: price can ride the lower band for days as volatility expands. The band describes where price is, not where it will go.
Common Myths
Myth: Touching the lower band means the bottom is in.
Truth: In trends price hugs the outer band for long stretches. A band touch is a description of an unusual move, not a reversal promise.
Myth: Bollinger bands predict volatility.
Truth: They measure volatility that already happened. A squeeze says conditions are calm now; it does not guarantee a breakout.
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5Y Rankings
Performance across major assets, sorted by return.
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